EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of July 1, 2004 (the
"Effective Date"), is made between Xxxxxx Medical Technology, Inc., a Delaware
corporation (the "Company") and F. Xxxxx Xxxx (the "Employee").
1. Employment. The Company hereby employs the Employee and the Employee
hereby accepts employment all upon the terms and conditions herein set forth.
2. Duties. The Employee is engaged as the Executive Chairman of the
Company and hereby promises to perform and discharge well and faithfully the
duties which may be assigned to him from time to time by the Board of Directors
of the Company (the "Board") in connection with the conduct of the Company's
business.
3. Extent of Services. The Employee shall devote his entire time,
attention, and energies to the business of the Company and shall not without the
approval of the Company, during the term of this Agreement, be engaged in any
other business activity, regardless of whether such activity is pursued for
gain, profit or other pecuniary advantage; but this shall not be construed as
preventing the Employee from investing his personal assets in businesses which
do not compete with the Company in such form or manner as will not require any
services on the part of the Employee in the operation of the affairs of the
companies in which such investments are made and in which his participation is
solely that of an investor, and except that the Employee may purchase securities
in any corporation whose securities are regularly traded on NASDAQ, a national
or regional stock exchange or in the over-the-counter market provided such
purchase shall not result in his collectively owning beneficially at any one
time one percent (1 %) or more of the equity securities of any corporation
engaged in a business competitive to that of the Company. Nothing in this
paragraph 3 shall prevent the Employee from serving on the Board of Directors of
any other company, so long as the Board shall approve each position held by the
Employee.
4. Compensation Matters.
(a) Base Salary. For services rendered under this Agreement, the Company
shall pay the Employee an aggregate salary of $100,000 per annum (the "Base
Salary"), payable (after deduction of applicable payroll taxes) in accordance
with the customary payroll practices of the Company, as may exist from time to
time.
(b) Annual Bonus. During the Employee's employment hereunder, in
addition to Base Salary, the Employee shall be eligible to receive an annual
performance bonus (the "Bonus") with a target of 50% of Base Salary for each
calendar year during Employee's employment; provided that, except as otherwise
provided in this Agreement, Employee must be employed on the last day of such
calendar year in order to receive the Bonus attributable thereto. The Employee's
entitlement to the Bonus for any particular calendar year shall be based on the
attainment of performance objectives established by the Compensation Committee
of the Company (the "Committee") and communicated to the Employee in writing at
the beginning of each calendar year. The Committee shall determine the
Employee's entitlement to the Bonus, based on the achievement of the performance
objectives of such year, as determined by the Committee and communicated to the
Employee, in good faith within thirty (30) days after the completion of the
audit for such calendar year, which shall be paid by the Company no later than
ten (10 days following such determination. The Employee shall also be eligible
for and participate in such fringe benefits as shall be generally provided to
executives of the Company, including medical insurance and retirement programs
which may be adopted from time to time during the term hereof by the Company.
The Employee shall be responsible for making any generally applicable employee
contributions required under such fringe benefit programs.
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July 1, 2004
Page 2
(c) Future Option Incentive Grants. During the term of this Agreement,
the Employee shall be eligible for participation in the Amended and Restated
Xxxxxx Medical Group, Inc. 1999 Equity Incentive Plan (the "Stock Option Plan"),
as may be amended from time to time, and any other stock option plan
administered by the Compensation Committee of the Board of Directors.
(d) The Committee shall review the Employee's Compensation at least once
per year and award such bonuses or make such increases to the Base Salary as the
Committee, in its sole discretion, determines are merited, based upon the
Employee's performance and consistent with compensation policies of the Company.
5. Sick Leave and Vacation. During the term of this Agreement, the
Employee shall be entitled to annual vacation of at least five (5) weeks, or
such greater time period if permitted by Company policy, to be taken at his
discretion, in a manner consistent with his obligations to the Company under
this Agreement. The actual dates of such vacation periods shall be agreed upon
mutual discussions between the Company and Employee; provided, however, that the
Company shall have the ultimate decision with respect to the actual vacation
dates to be taken by Employee, which decision shall not be unreasonable. The
Employee shall also be entitled to sick leave consistent with Company policy.
6. Expenses; Relocation. During the term of this Agreement, the Company
shall reimburse the Employee for all reasonable out-of-pocket expenses incurred
by the Employee in connection with the business of the Company and in
performance of his duties under this Agreement upon the Employee's presentation
to the Company of an itemized accounting of such expenses with reasonable
supporting data.
7. Term.
(a) The Employee employment under this Agreement shall commence on the
Effective Date and shall expire on June 30, 2006. Notwithstanding the foregoing,
the Company may at its election, subject to paragraph 7(b) below, terminate the
obligations of the Company as follows:
(i) Upon 30 days' notice if the Employee becomes physically or
mentally incapacitated or is injured so that he is unable to perform the
services required of him hereunder and such inability to perform continues for a
period in excess of six (6) months and is continuing at the time of such notice;
or
(ii) For "Cause" upon notice of such termination to the Employee.
For purposes of this Agreement, the Company shall have "Cause" to terminate its
obligations hereunder upon (A) the determination by the Board that the Employee
has ceased to perform his duties hereunder (other than as a result of his
incapacity due to physical or mental illness or injury), which failure amounts
to an intentional and extended neglect of his duties hereunder, (B) the
Employee's death, (C) the determination of the Board that the Employee has
engaged or is about to engage in conduct materially injurious to the Company,
(D) the Employee's having been convicted of a felony, or (E) the Employee's
participation in activities proscribed by the provisions of paragraphs 9 or 10
hereof or material breach of any of the other covenants herein; or
(iii) Without Cause upon 30 days' notice of such termination to the
Employee.
(b) (i) If this Agreement is terminated pursuant to paragraph 7(a)(i)
above, the Employee shall receive salary continuation pay from the date of such
termination until June 30, 2005 at the rate of 100% of the Base Salary, reduced
by applicable payroll taxes and further reduced by the amount received by the
Employee during such period under any Company-maintained disability insurance
policy or plan or under Social Security or similar laws. Such salary
continuation payments shall be paid periodically to the Employee as provided in
paragraph 4(a) for the payment of the Base Salary.
Bays Employment Agreement
July 1, 2004
Page 3
(ii) If this Agreement is terminated pursuant 7(a)(ii)
above, the Employee shall receive no salary continuation pay or severance pay.
(iii) If this Agreement is terminated pursuant to
paragraph 7(a)(iii) above, the Employee shall receive salary continuation pay
for a period of twelve (12) months from and after the date of such termination
(the "Salary Continuation Period) equal to the Base Salary. Such salary
continuation payments (less applicable payroll taxes) shall be paid periodically
to the Employee as provided in paragraph 4(a) for the payment of the Base
Salary. During the Salary Continuation Period, the Employee shall also be
eligible to receive continued coverage under all of the Company's current health
benefit and life insurance programs at the same rates that were applicable to
the Employee prior to the commencement of the Salary Continuation Period.
(c) During the Salary Continuation Period, the Employee shall be
under no obligation to mitigate any of the costs to the Company of the salary
continuation payments.
8. Representations. The Employee hereby represents to the Company that
(a) he is legally entitled to enter into this Agreement and to perform the
services contemplated herein, and (b) he has the full right, power and
authority, subject to no rights of third parties, to grant to the Company the
rights contemplated by paragraph 10 hereof.
9. Disclosure of Information. The Employee recognizes and acknowledges
that the Company's and its predecessors' trade secrets, know-how and proprietary
processes as they may exist from time to time are valuable, special and unique
assets of the Company's businesses, access to and knowledge of which are
essential to the performance of the Employee's duties hereunder. The Employee
will not, during or after the term of his employment by any of the Company, in
whole or in part, disclose such secrets, know-how or processes to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever, nor shall the Employee make use of any such property for his own
purposes or for the benefit of any person, firm, corporation or other entity
(except the Company) under any circumstances during or after the term of his
employment, provided that after the term of his employment these restrictions
shall not apply to such secrets, know-how and processes which are then in the
public domain (provided further that the Employee was not responsible, directly
or indirectly, for such secrets, know-how or processes entering the public
domain without the Company's consent).
10. Inventions. The Employee hereby sells, transfers and assigns to the
Company or to any person, or entity designated by the Company all of the entire
right, title and interest of the Employee in and to all inventions, ideas,
disclosures and improvements, whether patented or unpatented, and copyrightable
material, made or conceived by the Employee, solely or jointly, during the term
hereof which relate to methods, apparatus, designs, products, processes or
devices, sold, leased, used or under consideration or development by the Company
or any of its predecessors, or which otherwise relate to or pertain to the
business, functions or operations of the Company or any of its predecessors or
which arise from the efforts of the Employee during the course of his employment
for the Company or any of its predecessors. The Employee shall communicate
promptly and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned inventions,
ideas, disclosures and improvements; and the Employee shall execute and deliver
to the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Employee to permit the Company
or any person or entity designated by the Company to file and prosecute the
patent applications and, as to copyrightable material, to obtain copyright
thereof. Any invention relating to the business of the Company and disclosed by
the Employee within one year following the termination of this Agreement shall
be deemed to fall within the provisions of this paragraph unless proved to have
been first conceived and made following such termination.
Bays Employment Agreement
July 1, 2004
Page 4
11. Covenants Not To Compete or Interfere. During the term of this
Agreement, including any extensions, and for a period ending twelve (12) months
from and after the termination of the Employee's employment hereunder, the
Employee shall not (whether as an officer, director, owner, employee, partner or
other direct or indirect participant) engage in any in Competitive Business.
"Competitive Business" shall mean the manufacturing, supplying, producing,
selling, distributing or providing for sale of any orthopaedic product, device
or instrument manufactured or sold by the Company or its subsidiaries or in
clinical development sponsored by the Company or its subsidiaries, in each case,
as of the date of termination of the Employee's employment. For such period, the
Employee shall also not interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Company or its subsidiaries
and any customer, supplier, lessor, lessee or employee of the Company or its
subsidiaries. It is the intent of the parties that the agreement set forth in
this paragraph 11 apply in all parts of the world.
Employee agrees that a monetary remedy for a breach of the agreement set
forth in this paragraph 11 will be inadequate and impracticable and further
agrees that such a breach would cause the Company irreparable harm, and that the
Company shall be entitled to temporary and permanent injunctive relief without
the necessity of proving actual damages. In the event of such a breach, Employee
agrees that the Company shall be entitled to such injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions
as a court of competent jurisdiction shall determine.
It is the desire and intent of the parties that the provisions of this
paragraph 11 shall be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this paragraph 11 shall be adjudicated
to be invalid or unenforceable, this paragraph 11 shall be deemed curtailed,
whether as to time or location, to the minimum extent required for its validity
under the applicable law and shall be binding and enforceable with respect to
the Employee as so curtailed, such curtailment to apply only with respect to the
operation of this paragraph in the particular jurisdiction in which such
adjudication is made. If a court in any jurisdiction, in adjudicating the
validity of this paragraph 11, imposes any additional terms or restrictions
which respect to the agreement set forth in this paragraph 11, this paragraph 11
shall be deemed amended to incorporate such additional terms or restrictions.
12. Injunctive Relief. If there is a breach or threatened breach of the
provisions of paragraphs 9, 10 or 11 of this Agreement, the Company shall be
entitled to an injunction restraining the Employee from such breach. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies for such breach or threatened breach.
13. [Reserved].
14. [Reserved].
15. Insurance. The Company may, at its election and for its benefit,
insure the Employee against accidental loss or death, and the Employee shall
submit to such physical examination and supply such information as may be
required in connection therewith.
16. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered mail to
0000 Xxxx Xxxx, Xxxxxxxxxxxx, XX 00000, in the case of the Employee, or to
Xxxxxx Medical Technology, Inc., 0000 Xxxxxxx Xxxx, Xxxxxxxxx, XX 00000, Attn:
General Counsel, in the case of the Company, or to such other address as either
party shall notify the other.
17. Waiver of Breach. A waiver by the Company or Employee of a breach of
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach of the other party.
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July 1, 2004
Page 5
18. Governing Law. This Agreement shall be governed by and construed by
and enforced in accordance with the laws of the state of Tennessee, without
reference to the conflicts of laws principles therein.
19. Assignment. This Agreement may be assigned, without the consent of
the Employee, by the Company to any person, partnership, corporation, or other
entity which has purchased substantially all the assets of such Company,
provided such assignee assumes all the liabilities of such Company hereunder.
20. Entire Agreement. This instrument contains the entire agreement of
the parties with respect to the subject matter referred to herein and supersedes
any and all agreements, letters of intent or understandings between the Employee
and the Company, its subsidiaries, or any of the Company's principal
shareholders with respect thereto. These Agreements may be changed only by an
agreement or agreements in writing signed by a party against whom enforcement of
any waiver, change, modification, extension, or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
AGREED AND ACCEPTED:
XXXXXX MEDICAL TECHNOLOGY, INC. EMPLOYEE
By: /s/ Xxxxx X. Xxxxxx /s/ F. Xxxxx Xxxx
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Xxxxx X. Xxxxxx F. Xxxxx Xxxx
Chairman of the Board of Directors
